Finra ordered Vanguard to pay an $800,000 fine for issuing misleading account statements to money market customers and failing to respond to them when they indicated something was wrong.
The Financial Industry Regulatory Authority Inc. found that from November 2019 to September 2020, Vanguard Marketing Corp. miscalculated the estimated annual yield and annual income for nine money market funds on approximately 8.5 million account statements, according to the Finra order posted Thursday.
The firm failed to update the yield data due to “a technical issue where newer information received through an automated data feed did not overwrite certain existing data,” which led to the yield and income projections being overstated.
After Finra began its investigation, Vanguard self-reported other problems on money market account statements that resulted in miscalculation of investment return.
One occurred when customer contributions to an account were identified as an increase in market value instead of a cash deposit. This error affected approximately 23,000 statements from October 2019 to June 2021.
Another misstep involved reflecting margin credits and debits as market appreciation or depreciation. That snafu affected 57,000 statements between October 2019 and June 2021.
The firm also inaccurately report “corporate actions,” such as stock splits, which affected the investment return reporting for an unknown number of accounts.
The errors didn't affect the market yield paid to customers nor the holdings information displayed on their statements, according to the Finra order.
Vanguard not only issued misleading customer statements but also failed to follow up on customer warnings that something was wrong, Finra found.
From October 2019 to March 2021, the firm received communications from 100 customers who pointed out miscalculations and other errors on their statements. It failed to investigate promptly, Finra said, but did correct the statements after finally looking into the problems.
Vanguard agreed to a censure and an $800,000. The firm did not admit or deny Finra’s findings. A company spokesperson did not immediately respond to a request for comment.
Vanguard Marketing Corp. — a subsidiary of The Vanguard Group — is based in Malvern, Pennsylvania, and has approximately 8,000 registered representatives operating out of 13 branch offices.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
